Envi Law Small scale mining.pdf

8/11/2019 Envi Law Small scale mining.pdf

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HIGHLIGHTS OF THE MINING ACT OF 1995 (RA7942)The Philippine Mining Act of 1995 and its Revised Implementing Rules and Regulations (RIRR) is considered in theindustry today as one of the most socially and environmentally-sensitive legislations in its class. It has specific provisionsthat take into consideration:

Local government empowerment; Respect and concern for the indigenous cultural communities; Equitable sharing of benefits of natural wealth; Economic demands of present generation while providing the necessary foundation for future generations; Worldwide trend towards globalization; and Protection for and wise management of the environment.

GOVERNING PRINCIPLES

The Implementing Rules and Regulations (DENR Administrative Order No.96-40) of the Philippine Mining Act of 1995

provides strict adherence to the principle of SUSTAINABLE DEVELOPMENT. This strategy mandates that the needs of thepresent should be met without compromising the ability of the future generations to meet their own needs, with theview of improving the quality of life, both now and in the future. Sustainable development provides that the use ofmineral wealth shall be pro-people and pro-environment in sustaining wealth creation and improve quality of life.

The principles of SUSTAINABLE MINING operates under the following terms:

Mining is a temporary land use for the creation of wealth, leading to an optimum land use in post-mining stageas consequence of progressive and engineered mine rehabilitation works done in cycle with mining operations;

Mining activities must always be guided by current Best Practices in environmental management committed toreducing the impacts of mining while efficiently and effectively protecting the environment.

The wealth created as a result of mining accruing to the Government and the community should lead to otherwealth-generating opportunities for people in the communities and for other environment-responsibleendeavors.

Mining activities shall be undertaken with due and equal regard for economic and environmentalconsiderations, as well as for health, safety, social and cultural concerns.

Conservation of minerals is effected not only through technological efficiencies of mining operations but alsothrough the recycling of mineral-based products, to effectively lengthen the usable life of mineral commodities.

The granting of mining rights shall harmonize existing activities, policies and programs of the Government thatdirectly or indirectly promote self-reliance, development and resource management. Activities, policies andprograms that promote community-based, community-oriented and procedural development shall beencouraged, consistent with the principles of people empowerment and grassroots development.

ORGANIZATIONAL IMPLEMENTATION

The Mining Act reverts back the Mines and Geosciences Bureau (MGB) from a Staff to a Line Bureau. Under thisarrangement, the MGB Central Office has now the administrative jurisdiction and responsibility over its regional offices.The Line Bureau structure was contemplated to ensure organizational efficiency and flexibility in managing limitedresources and technical expertise.


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The authorities/responsibilities of the MGB are as follows:

Management and administration of mineral lands and resources, including the granting of mining permits andmineral agreements;

Enforcement and monitoring of Environmental Work Programs (EWP) and Environmental Protection and Enhancement Program (EPEP); Establishment and operationalization of the Contingent Liability and Rehabilitation Fund (CLRF), as well as the

mandatory Final Mine Rehabilitation and Decommissioning Plan; Cancel mining applications and mining rights violating the provisions of the Mining Act, its implementing rules

and regulations, and/or the terms and conditions of a mining permit/contract/agreement; For the Regional Directors to impose Cease-and-Desist Orders (CDO); To deputize the PNP, LGUs, NGOs and other responsible entities to police mining activities; To assist the Environmental Management Bureau (EMB)/DENR Regional Offices in

processing/evaluation/conduct of EIA in mining projects; To manage and administer Mineral Reservation area (Note: Mineral Reservations, under the New Act, include

offshore marine areas.)

Mines and Geosciences Bureau

The Mines and Geosciences Bureau (MGB) is responsible for the conservation, management, development and proper use of thecountrys mineral resources including those in reservations and lands of public domains.

ROLE OF LOCAL GOVERNMENTS

The IRR highlights the role of local government units (LGUs) in mining projects, both as beneficiaries and as activeparticipants in mineral resources management, in consonance with the Constitution and government policies on localautonomy and empowerment. As such, the Mining Act provides the following:

In consonance with the Local Government Code of 1992 (LGC), LGUs have a share of forty percent (40%) of the gross collection derived by the National Government from mining taxes, royalties and other such taxes, fees or

charges from mining operations in addition to the occupational fees (30% to the Province and 70% to the Municipalities concerned); In consonance with the LGC and the People Small-Scale Mining Act (RA 7076), the LGUs shall be responsible for

the issuance of permits for small-scale mining and quarrying operations, through the Provincial/City MiningRegulatory

Boards (PMRBs/CMRBs); To actively participate in the process by which the communities shall reach an informed decision on the social

acceptability of a mining project as a requirement for securing an Environmental Compliance Certificate (ECC);

To ensure that relevant laws on public notices, consultations and public participation are complied with; To participate in the monitoring of mining activities as a member of the Multipartite Monitoring Team, as well

as in the Mine Rehabilitation Fund Committee; To act as mediator between the Indigenous Cultural Communities (ICCs) and the mining contractor as may be

requested/necessary; To be the recipients of social infrastructures and community development projects for the utilization and

benefit of the host and neighboring communities; and To coordinate with and assist the DENR and the MGB in the implementation of the Mining Act and the IRR


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AREAS CLOSED TO THE MINING APPLICATION

Pursuant to the Mining Act of 1995 and in consonance with State policies and existing laws, areas may either be closedto mining operations, or conditionally opened, as follows:

Areas CLOSED to mining applications:

Areas covered by valid and existing mining rights and applications; Old growth or virgin forests, mossy forests, national parks, provincial/municipal forests, tree parks, greenbelts,

game refuge, bird sanctuaries and areas proclaimed as marine reserve/marine parks and sanctuaries and areasproclaimed as marine reserve/marine parks and tourist zones as defined by law and identified initialcomponents of the NIPAS, and such areas as expressly prohibited thereunder, as well as under DENRAdministrative Order No. 25, s. 1992, and other laws;

Areas which the Secretary may exclude based, inter alia, or proper assessment of their environmental impactsand implications on sustainable land uses, such as built-up areas and critical watershed with appropriatebarangay/municipal/provincial Sanggunian ordinances specifying therein the location and specific boundariesof the concerned area; and

Areas expressly prohibited by law.

The following areas may be opened for mining operations, the approval of which are subject to the following conditions:

Military and other government reservations, upon prior written consent by the government agency having jurisdiction over such areas;

Areas near or under public or private buildings, cemeteries, and archaeological and historic sites, bridges,highways, waterways, railroads, reservoirs, dams and other infrastructure projects, public or private works,including plantations or valuable crops, upon written consent of the concerned government agency or privateentity, subject to technical evaluation and validation by the MGB;

Areas covered by FTAA applications, which shall be opened, for quarry resources upon written consent of theFTAA applicants/contractors. However, mining applications for sand and gravel shall require no such consent;

DENR Project areas upon prior consent from the concerned agency

ANCESTRAL LANDS AND ICC AREASThe Mining Act fully recognizes the rights of the Indigenous Peoples (IPs)/Indigenous Cultural Communities (ICCs) andrespect their ancestral lands. Thus, in accordance with DENR Administrative Order No. 2, and consistent with the newIndigenous Peoples Rights Act (IPRA), the following shall be observed:

No mineral agreements, FTAA and mining permits shall be granted in ancestral lands/domains except with priorinformed consent in: a) CADC/CLC areas; and b) areas verified by the DENR Regional Office and/or appropriate

offices as actually occupied by Indigenous Cultural Communities under a claim of time immemorial possession; Where written consent is granted by the ICCs, a royalty payment shall be negotiated which shall not be less

than 1% of the Gross Output of the mining operations in the area. This Royalty shall form part of a Trust Fundfor socioeconomic well being of the ICCs in accordance with the management plan formulated by the ICCs inthe CADC/CALC area. (In a large-scale mining operation the 1-% Royalty could easily run into several tens ofmillion pesos per year).

Representation in the Multi-partite Monitoring Committee;


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SOCIAL AND COMMUNITY DEVELOPMENT AND RESEARCH AND DEVELOPMENT

The Mining contractors/operators shall allocate a minimum of 1% of their direct mining and milling costs for thefollowing:

Development of the host and neighboring communities and mine camp, including the constructionand maintenance of social infrastructures to promote the general welfare of the inhabitants in thearea. Such infrastructures include roads and bridges, school buildings, churches, recreational facilities,housing facilities, water and power supplies, etc.;

For the development of mining technology and geosciences, particularly those related to improvedefficiencies and environmental protection and rehabilitation;

The mining contracts under the regimes of MPSA and FTAA also provide for the mandatory Filipinizationprogram, technology transfer, and the training and priority employment of local residents. These contracts furthermandate that mining operations shall maximize the utilization of local goods and services, the creation of self-sustaininggenerating activities, and skills-development.

ENVIRONMENTAL AND SAFETY CONCERNS

A significant feature of the Mining Act of 1995 and its IRR is the premium given to environmental protection. Stringentmeasures were institutionalized to ensure the compliance of mining contractors/operators to internationally acceptedstandards of environmental management. On top of the ECC conditionalities, herewith are some of the highlightsprovided for in the IRR;

Mandatory establishment of the Contingent Liability and Rehabilitation Fund (CLRF) to be managed bya Steering Committee chaired by the MGB Director with members coming from concernedgovernment agencies;

Conduct of Environmental Work Program (EWP) during the exploration stage and an EnvironmentalProtection and Enhancement Program (EPEP) during the development and operations stage.

Institutionalization of an incentive mechanism to mining companies utilizing engineered and well-maintained mine waste and tailings disposal systems with zero-discharge of materials/effluentsand/or with wastewater treatments plants;

Mandatory constitution and operationalization of a Multipartite Monitoring Team composed ofrepresentatives from the MGB, DENR Regional Office, affected communities, Indigenous CulturalCommunities, an environmental NGO, and the Contractor/Permit Holder, to monitor miningoperations;

Mandatory establishment and operationalization of a Mine Environmental and Protection andEnhancement Office (MEPEO) in each mining/contract area which shall set the level of priorities andmarshal the resources needed to implement environmental management programs;

Conduct of an independent environmental audit to identify environmental risks affecting miningoperations as a basis for the development of an effective environmental management system;

Mandatory preparation and implementation of a final Mine Rehabilitation/ Decommissioning Plan atleast five (5) year prior to the end of the life of the mine, to be undertaken in consultation and incoordination with the concerned communities, and shall be submitted for approval by the MGB andLGU concerned;


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Imposition of higher penalty (P50.00/MT) to mining companies that are found to have illegallydischarged and/or discharging solid fractions of tailings into areas other than the approved tailingsdisposal area;

Authorizing the MGB Regional Director to summarily suspend mining/quarrying operations in case ofimminent danger to human safety or the environment;

Mandatory compliance with the rules and regulations of the Mines Safety Rules and Regulations by allContractors, Permittees, Lessees, Permit Holders and Service Contractors; and

Institution of the Presidential Mineral Industry Environmental Award to be given to exploration oroperating mining companies based on their exemplary environmental performance andaccomplishments.

ON SOCIAL ACCEPTABILITY

Mining contractors/operators shall allocate a minimum of 1% of their direct mining and milling costs for thedevelopment of the following:

Host and neighboring communities and mine camp to promote the general welfare of inhabitants in

the area. This includes construction and maintenance of infrastructures such as roads and bridges,school buildings, housing and recreational facilities, water and power supplies, etc.;

Mining technology and geosciences, particularly those related to improved efficiencies andenvironmental protection and rehabilitation.

MINING PERMITS GRANTED TO QUALIFIED PERSONS

The following are the types of mining permits granted under the Mining Act of 1995 and its IRR:

1. Exploration Permit - these permits are issued to qualified individuals or local and foreign corporations grantingthem to undertake purely mineral exploration activities. Has a term of two (2) years renewable for like termsbut not to exceed a total term of six (6) years for non-metallic minerals and eight (8) years for metallic minerals.The Permittee may eventually apply for Mineral Agreement or FTAA, subject to maximum areas limitations. Themaximum areas allowed per qualified person under an Exploration Permit are: 1,620 hectares in any oneprovince or 3,240 hectares in the entire country for an individual; and 16, 200 hectares in any one province or32,400 hectares in the entire country for a corporation, association, cooperative or partnership.

2. Mineral Agreement - are granted to individuals or local corporations giving them the right to explore, developand utilize the minerals within the contract area. There are three modes of Mineral Agreements namely:

3. Mineral Production Sharing Agreement (MPSA) - an agreement wherein the Government grants to the

contractor the exclusive right to conduct mining operations within, but not title over, the contract area andshares in the production whether in kind or in value as the owner of the minerals therein. The Contractor shallprovide the necessary financing technology, management and personnel;

4. Co-Production Agreement (CA) - an agreement between the Government and the Contractor wherein theGovernment shall provide inputs to the mining operations other than the mineral resources; and


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Sand and Gravel Permits - are issued for the extraction, removal and disposition of sand and gravel and other looseor unconsolidated materials. Permits with areas not exceeding 5 hectares are issued by the Provincial Governor/CityMayor while those exceeding 5 hectares but not more than 20 hectares are issued by the MGB Regional Director. ASand and Gravel Permit has a term of 5 years and renewable for like terms.

Quarry Resources Permits - In accordance with the Local Government Code of 1991, mining permits with areas notmore than 5 hectares have been devolved to the Provincial Governor or the City Mayor for approval uponrecommendation of the Provincial/City Mining Regulatory Board. These include the Quarry Permit, Guano Permit,Gratuitous Permit and Gemstone Gathering Permit.

Small-Scale Mining Permits - In consonance with the Local Government Code and RA No. 7076, small-scale miningpermits are approved and issued by the City Mayor/Provincial Governor, upon recommendation of the Provincial/CityMining Regulatory Board.

Mineral Processing Permit a permit granting the right to process minerals. It is issued by the DENR Secretarywith a term of 5 years and renewable for like terms.

Ore Transport Permit no minerals, mineral products and by-products shall be transported unless accompanied byan Ore Transport Permit. The OTP is issued by the MGB Regional Director concerned.

TAXES AND INCENTIVESMining contractors of MPSA and FTAA can avail of fiscal and non-fiscal incentives granted under the OmnibusInvestment Code of 1987, as amended.

In addition to these incentives, the following are also granted by the Mining Act.

Incentives for pollution control devises; Incentives for income tax carry forward of losses; Incentives for income tax accelerated depreciation on fixed assets; Investment guarantees, such as investment repatriation, earnings remittance, freedom from

expropriation, and requisition of investment, and confidentiality of information.

For FTAA contractors, an additional incentive, in the form of a tax holiday on national taxes is granted from the startof the construction and development period up to the end of the cost recovery period, but not to exceed five yearsfrom the start of commercial operation. After the recovery period, the contractor starts paying these taxes, includingthe additional government share based on negotiated scheme.

TAXES PAID

Mining activities generate income both for the local and national governments. The following tax payments areprovided for in the Mining Act, the National Internal Revenue Code and other laws:


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Payments to the National Government:

Corporate Income Tax Excise Tax on Minerals Customs Duties Value Added Tax Royalties on Minerals Extracted from Mineral Reservation Documentary Stamp Tax Capital Gains Tax

Payments to Local Government:

Business Tax Real Property Tax Registration Fees Occupation Fees Community Tax

Other Local Taxes

Withholding Taxes on:

Payroll Interest Income in Banks Royalties to Technology Transfer Interest Payments to Foreign Loans Foreign Stockholders Dividends Remittance to Principal

In addition to the above taxes, duties and fees, mining contractors are required to pay or expend on:

Additional Government Share for FTAA contractors Royalties to Landowners/Claim owners Royalties to Indigenous Peoples Social Development Programs Environmental Obligations Research and Development of Mining Technology and Geosciences

The benefits of mining projects provides approximately not less than sixty percent (60%) of the total proceeds of themining operations to the government and the Filipino people, considering that the contractor infused 100% of thecapital. These proceeds include all direct and indirect taxes and fees and benefits to other Filipinos.

Envi Law Small scale mining.pdf

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